PETALING JAYA: Padini Holdings Bhd

’s financial year 2027 (FY27) is expected to remain challenging as cost pressures – particularly elevated depreciation and the now full-year impact of the sales and service tax (SST) scope expansion on rental expenses – have proven more structural than transitory.

Apex Research said Padini’s results for the fourth quarter of FY26 (4Q26) missed expectations, accounting for only 89% of its full-year forecast and 86% of consensus’.

This comes as steep revenue normalisation post the festive quarter met persistently elevated operating costs.

Excluding net foreign-exchnge gain and inventory losses/write-offs, the group reported a 4Q26 core net loss of RM6.4mil, bringing FY26 core net profit to RM127.7mil.

“Management continues to guide for a challenging retail environment amid weakening consumer purchasing power, ongoing trade tensions and an elevated inflation and interest rate environment, though it remains optimistic on delivering a satisfactory FY27 performance through continued cost control, working capital optimisation and operational streamlining.”

Apex Research noted the Malaysian Anti-Corruption Commission investigation overhang has been substantially resolved following the unfreezing of the group’s bank accounts in July 2026, with management confirming no director, officer or employee has been charged or subject to forfeiture proceedings, which should remove a key source of sentiment overhang on the stock.

“That said, with revenue growth likely to stay muted and operating deleverage persisting into 1Q27, we see limited near-term earnings recovery catalysts and expect consensus estimates to trend lower following this set of results,” Apex Research said.

Padini’s analyst briefing was scheduled to take place last Friday.

Apex Research retained a “hold” call on Padini with a lower target price of RM1.29 from RM1.45.

This is based on an unchanged price-to-earnings multiple of 10.5 times, applied to its lower FY27 earnings per share of 12.2 sen from 13.8 sen previously.